Sabyasachi Mukharji, J. -
(1.)The petitioner in this application challenges a notice under Section 148 of the Income-tax Act, 1961, for the assessment year 1969-70. The said notice is dated 27th February, 1971. Originally there was assessment for the said year. Thereafter, there was an appeal and certain allowances were allowed to the petitioner. The said assessment had been sought to be reopened in this case under Clause (b) of Section 147 of the Income-tax Act, 1961. The petitioner alleges that there were no grounds or materials for the reopening of the said assessment and the income of the petitioner had not escaped assessment. In answer to the rule nisi, affidavit-in-opposition has been filed by one Mandayam Nayaka Krishnaswamy, Income-tax Officer, "I" Ward, Companies District IV, Calcutta. In paragraph 12 of the said affidavit he has stated as follows :
(a) At the time of original assessment of the petitioner for the assessment year 1969-70 along with various papers and documents produced by and/or on behalf of the petitioner before the assessing Income-tax Officer was a document described as 'depreciation schedule' and a document described as ' interest and discount account'.
(b) The said depreciation schedule contained various items of properties and/or assets as well as plant and machinery, both new and second, hand. One of such items in the said depreciation schedule was a second-hand centrifugal pump valued at Rs. 3,500. Development rebate was allowed in the original assessment also oh this second-hand centrifugal pump and as such development rebate was allowed in excess of the amount allowable to the petitioner.
(c) In the said details of interest and discount account various items of interest and discount alleged to have been paid by the petitioner were included. One of such items was interest charged on arrear of income-tax of a sum of Rs. 19,054.12, The amount of interest was not an allowable deduction in the assessment but the said sum was not added to the income of the petitioner in the original assessment.
(d) The said documents were merely produced by and/or produced by the petitioner before the assessing Income-tax Officer in the original assessment but his attention was not drawn to the said items by and/or on behalf of the petitioner.
(e) In the premises the income of the petitioner was under-assessed. "
(2.)It appears that on two counts it is alleged that the income of the petitioner has escaped assessment. One was development rebate on secondhand machinery and the second was interest charged on arrear of income-tax of a sum of Rs. 19,054.12. It was contended that such allowances were not permissible and the petitioner had obtained excessive relief thereby. Whenever there is a challenge to reopening of an assessment under Section 148 of the Income-tax Act, 1961, two conditions have to be satisfied. It is necessary first to establish either under Clause (a) of Section 147 of the Act that there was omission and/or failure on the part of the assessee to disclose fully or truly all material facts at the time of the assessment or under Clause (b) there was information in the possession of the Income-tax Officer, and, secondly, it has to be established that either the knowledge that there was omission or failure as mentioned in Clause (a) or the information mentioned in Clause (b) has led to the escapement or underassessment of income chargeable to tax. These are two essential ingredients before action under Section 148 can be taken subject to certain conditions to be fulfilled as required in the subsequent sections. In this case, as mentioned hereinbefore, reopening was not sought to be done due to omission or failure on the part of the assessee. Clause (a) of Section 147 of the Income-tax Act was thus not attracted. Reopening was done on the basis, it is alleged, of the information.
(3.)" Information ", it was argued, would be in this case the new knowledge derived from reading the old records with the new perspective. In other words, it was contended that even if from the old facts new revaluation was done that would be " information " and would, subject to other conditions being fulfilled, justify action under Clause (b) of Section 147 of the Income-tax Act, 1961. The expression "information" under Section 34 of the Indian Income-tax Act, 1922, and Section 147 of Income-tax Act, 1961, has been the subject of judicial scrutiny and interpretation in several decisions. In the case of Commissioner of Income-tax v. A. Raman and Co., the Supreme Court observed that the expression " information " in the context in which it occurred in Section 147(b) of the Income-tax Act, 1961, must mean instruction or knowledge derived from an external source concerning facts or particulars, or as to law relating to a matter bearing on the assessment. At page 16 of the report the Supreme Court further observed that the jurisdiction of the Income-tax Officer to reassess income arose if he had in consequence of information in his possession reason to believe that income chargeable to tax had escaped assessment. That information must, it was true, come into the possession of the Income-tax Officer after the previous assessment, but even if the information be such that it could have been obtained during the previous assessment from an investigation of the materials on the record, or the facts disclosed thereby or from other enquiry or research into facts or law, but was not in fact obtained, the jurisdiction of the Income-tax Officer was not affected. Therefore, it appears to me that the Supreme Court in the aforesaid decision decided the following points : (1) the instruction or knowledge must be subsequent to the original assessment, (2) the knowledge or instruction must be derived from an external source, (3) the fact that such knowledge or instruction could have been derived during the previous assessment from an investigation of the materials on record or fact disclosed thereby or from other enquiry but was not in fact derived would not prevent such knowledge or instruction from being considered as " information " in terms of Clause (b) of Section 147 of the Income-tax Act, 1961, (4) the knowledge or instruction must be such which must lead to the formation of the belief that income of the assessee had escaped assessment in the original assessment. In the case of Anandji Haridas and Co. (P.) Ltd. v. S.P. Khushare, the Supreme Court had to construe the expression " information " in the C. P. and Berar Sales Tax Act, 1947 (21 of 1947). The expression " information" in the said Act was considered to be in pari materia with the expression " information " in the Income-tax Act. It was contended before their Lordships of the Supreme Court on behalf of the revenue that " information " under Section 11A should be one from outside agency and not something appearing from the records of the assessment. According to their Lordship's view this contention was unacceptable. The fact that the knowledge or the instruction could have been derived from the facts on record of the original assessment would not prevent that knowledge or instruction from being considered as " information ". In appears that the decision in the case of Commissioner of Income-tax v. A, Raman & Co. was not referred to or relied on. The Supreme Court in the aforesaid case referred to and relied on the decision of the Madras High Court in the case of Salem Provident Fund Society Ltd. v. Commissioner of Income-tax,  42 I.T.R. 547 (Mad.) and the decision of the Kerala High Court in the case of United Mercantile Co. Ltd. v. Commissioner of Income-tax,  64 I.T.R. 218 (Ker.). In the case of R. B. Bansilal Alirchand Firm v. Commissioner of Income-tax, the Supreme Court again had to consider the expression " information ". There the Supreme Court found that if the facts had been properly considered at the time of the first assessment, the Income-tax Officer might have discovered the correct position and might have come to the conclusion that the assessee-firm in that case was not receiving interest as a partner, but the circumstance that such a decision could have been arrived at did not mean that, at the time when the Income-tax Officer started proceedings under Section 34(1)(b), he was not acting on information received from the decisions of the Tribunal and the High Court in the assessment proceedings of Bisesar House. The Supreme Court further held that that was not a case where the Income-tax Officer on his own initiative and on the material which was before him at the time of the first assessment had changed his opinion and come to a different conclusion. The Supreme Court found the correct conclusion was brought to the notice of the Income-tax Officer by the decision of the Tribunal and the High Court and that was information as a consequence of which he came to believe that the provisions of Section 34(1)(b) were attracted. In those circumstances it was held that the Income-tax Officer had, therefore, jurisdiction to issue the notice under Section 34(1)(b). In the case of Assistant Controller of Estate Duty v. Nawab Sir Mir Osman Ali Khan Bahadur, the Supreme Court held that the opinion of the Central Board of Revenue regarding the correct valuation of securities for the purpose of estate duty, expressed in an appeal preferred by the accountable person, was " information " within the meaning of Section 59 of the Estate Duty Act 1953, as amended by the Estate Duty (Amendment) Act of 1958, on the basis of which the Controller could entertain a reasonable belief that property assessed to estate duty had been under-valued. There the Supreme Court at page 380 of the report reiterated the view that the expression "information" was understood in the sense of instruction or knowledge derived from an external source concerning facts or particulars or as to law relating to a matter bearing on the assessment. In the case of Commissioner of Income-tax v. Dinesh Chandra H. Shah, the Supreme Court observed that mere change of opinion could not be a valid ground for reopening an assessment under Section 34(1)(b) of the Indian Income-tax Act, 1922. The Supreme Court referred to the decision in the case of Commissioner of Income-tax v. A. Raman & Co. The Supreme Court did not find it necessary to go into the question whether an inadvertent omission in the original assessment would justify the reopening of the assessment under Section 34(1)(b) on its subsequent discovery by the Income-tax Officer.